Turkiye Petrol Rafinerileri A.s. · BIST:TUPRS
Turkiye Petrol Rafinerileri A.s — Tüpraş — Investor Presentation (June 2022)
60 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, June 2022
Slide 1: Investor Presentation June 2022
Investor Presentation June 2022 Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by variables and changes in und
Slide 3: Refining Market
Refining Market Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices $/bbl 5yr range 5 yr ave 2021 2022 + OPEC ++ production cuts 130 + Impact of Iran & Venezuela sanctions 118.8 + Improved mobility following vaccine 110 113.3 deployments 104.4 + Russia-Ukraine war 98.2 90 83.7 87.2 81.4 - Concerns on global economic 73.0 75.0 70.8 74.6 74.1 develo
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • 73% of net capacity additions will come from Asia & Middle East • Net capacity and demand in Europe will remain roughly unchanged 2019-2025 Net Capacity Additions Capacity Additions by Region Closures Openings 2.6 Asia 44% 2.3 1.6 1.5 Middl
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5 yr range 5 yr ave 2021 2022 5yr range 5 yr ave 2021 2022 50 55 45.2 45 42.3 50 40 44.2 45 35 40 37.4 30 35 31.6 24.0 25 30 25 20 20 15 12.9 15 12.0 12.6 10 11.8 10.4 10.8 9.5 9.4 9.3 10 5 10.0 8.0 6.8 6.6 4.9 5.0 5.1 4.1 5 3.7 4.1 0 3.0 2.3 2.7 2.5 5.
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2022 2021 5 yr ave 5 yr range 2022 2021 5 yr ave 40 0 38.0 35 -5 30 -6.4 -10.7 -10.4 -11.0 -10 -11.7 -9.7 -12.9 -12.6 24.7 -13.9 -14.5 -13.6 25 -15 -16.0 -17.3 20 -20.2 -20 15 -22.2 15.1 15.7 12.5 13.7 14.1 12.7
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 5 0 -5 -10 -15 -20 -25 Arab Heavy Basrah Heavy -30 Kirkuk Iran OPEC+ Cut OPEC+ OPEC+ Cut Ural Sanctions Decision disagreement Decision Average* -35 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 1
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 10: Turkish Market, 3M 2022
Turkish Market, 3M 2022 January February March Diesel Million 5.6 5.6 5.4 Jet1 Tons 5.2 -4.3% 1.0 2.0 2.2 1.9 0.9 + 54.9% 1.9 0.9 0.4 0.2 0.3 0.6 1.7 1.8 1.7 1.8 0.3 0.3 0.2 0.3 0.2 1.6 1.8 1.7 1.7 0.4 0.3 0.3 0.2 2019 2020 2021 2022 2019 2020 2021 2022 Gasoline 0.7 0.9 0.9 LPG 0.8 0.8 0.5 0.5 0.5 0
Slide 11: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Tüpraş’ Market Share Tons 0.4 0.3 2021 12M Jet -0.4 0.3 0.1 Diesel 44% -5.9 Jet 86% -8.8 Diesel -13.6 -13.2 Gasoline 97% -12.3 1.9 3.0 Gasoline 2.4 Fuel Choice of Passenger Cars 2021 3.2 2.8 EV/Hybrid , 1% -2.9 -3.0 Diesel; LPG; LPG -3.2 Die
Slide 12: Company Overview
Company Overview Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 13: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet 77% 20% 3% Energy Investments Inc. (SPV) 51% 79.98% Foreign Ownership¹ 57% 40% Free Float 49% 100% Domestic Ownership 43% 100% ¹As of December 31st,2021 Jun-22 Hizmete Özel / Confid
Slide 14: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit İzmir Kırıkkale Batman Total Capacity (mn tons) 11.3 11.9 5.4 1.4 30 Turkey’s petroleum Nelson Complexity 14.5 7.66 6.32 1.83 9.5 product needs Storage Capacity (mn m3) 3.0 2.5 1.3 0.3 7.0 Baku Others; Tüpraş; OPET Marmara Terminal İstanbul 45% 55
Slide 15: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Jun-22 Hizmete Özel / Confidential Investor Hizmete Özel Presentation / Confidential Company Overview www.tupras.com.tr 15
Slide 16: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 40% • 1,812 stations as of 31 March 2022 • As of February 2022 Market share: 19.5% in white products; 22.9% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 7 million tons of product trade More than 3 million tons of spot cru
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 2 Crude Oil Tanker: 314,906 DWT • 1 Crude Oil - Product Tanker: 49,990 DWT • 10 Product Tanker: 171,383 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~7% share in Turkish rail freight market • ~1.7 mn ton of product
Slide 18: Operations
Operations Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 19: Crude Suppliers of Tüpraş
Crude Suppliers of Tüpraş In 2021, Tüpraş purchased 21 different types of crude from 11 countries with gravities ranging between 20-47 API. Main Crude Suppliers in 2021 Crude Oil Imports by Region (%) Middle East CIS Europe Africa America 3 3 1 2 3 2 2 10 12 12 11 10 10 10 14 3 7 14 7 13 14 21 34 21
Slide 20: Q1 2022 Product Yields
Q1 2022 Product Yields Q1 2021 Q1 2022 Other Other Bitumen 2% LPG Bitumen LPG 7% 3% Kok 2% Kok 5% 4% 5% Gasoline 4% Other 19% Gasoline Fuel Oil Fuel Oil Other white 20% 2% 8% white Black Prod. 2% Light Black Prod. 2% Light 14% Distil. 17% Distil. 25% Naphtha 26% 3% Naphtha 2% Mid. Distil. Jet Mid. D
Slide 21: Annual Product Yields
Annual Product Yields 2020 2021 Other LPG Other Bitumen 1% 3% Bitumen 2% LPG 12% Kok 8% 3% Kok Gasoline Other 4% Gasoline 3% 21% white Other 21% Fuel Oil Light Fuel Oil white 2% Black Prod. 1% Distil. 6% Black Prod. 2% Light 17% 25% 18% Distil. Naphtha 25% 1% Naphtha 1% Mid. Distil. Jet 57% 12% Mid.
Slide 22: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2019 2020 2021 2022 Crude Oil Semi Product Feedstock Total 8 105 108 7.0 4 7 96 98 96 98 6.9 91 7 7 88 4 8 9 82 85 5 7 6.5 7 8 65 6.0 6 9 101 101 93 91 91 87 86 81 76 75 5 56 4.6 4 Q1 Q2
Slide 23: Sales
Sales • Tüpraş generated 27.6 million tons of total sales in 2021. Total Sales Customer Groups 2021 mn tons 31.5 Other 29.8 29.2 International 27.6 10% 5.8 4.2 24.5 sales 6.8 5.9 21% 4.7 Jet 11% Bitumen Exports Total Sales, 25.7 25.6 6% Domestic Sales 22.4 19.8 21.7 2021 27.6 mn tons 2017 2018 2019
Slide 24: Product Sales in Q1 2022 (Million Tons)
Product Sales in Q1 2022 (Million Tons) • Tüpraş generated 6.5 million tons of sales in Q1 2022, 29% higher y-o-y. • Y-o-y growth in domestic jet fuel, gasoline, and diesel sales were strong with increasing domestic demand. Total Product Sales Domestic Sales of Selected Products Domestic Product Sal
Slide 25: Financials
Financials Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 26: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Tüpraş Net Margin Med Margin Clean Clean 9.3 Gross Inventory Net Med ($/bbl) Gross NET 8.1 Margin Effect Margin Margin Margin Margin 5.7 Q1 2022* 11.8 4.7 7.1 0.5 5.2 9.5 5.3 4.6 3.7 2021 10.5 2.1 8.4 3.6 5.7 1.6 1.7 1.3 1.6 Q1 2021 7.7 2.5 5.2 -1.0 1.5 -0.2 2022G 8-9
Slide 27: Income Statement (Million TL)
Income Statement (Million TL) Q1 Q1 Million TL % 2022 2021 Net Sales 76,541 19,821 286% COGS -71,237 -18,294 289% Gross Profit 5,304 1,527 247% Key Highlights of Income Statement Operating Expenses -1,050 -557 89% Income/Loss from other operations -1,498 -1,584 -5% • Y-o-y increase in Opex is mainly
Slide 28: Income Statement (Million TL)
Income Statement (Million TL) 12M 12M Million TL % 2021 2020 Net Sales 150,972 63,244 139% COGS -135,521 -61,480 -120% Gross Profit 15,451 1,764 776% Operating Expenses -3,242 -2,012 -61% Income/Loss from other operations -11,744 -371 -3065% Operating Profit 465 -619 - Inc./Loss from Eq. Pick ups &
Slide 29: Financial Highlights
Financial Highlights EBITDA (mn TL) Q1 Q2 Q3 Q4 Net Income¹ (mn TL) Q1 Q2 Q3 Q4 13,688 3,319 3,713 1,392 8,908 7,267 1,766 988 542 526 1,887 186 -2,494 1,027 1,700 4,668 870 896 3,778 4,039 2,739 378 376 -375 -760 738 -155 956 545 -2,265 2,210 2,512 4,668 1,495 383 977 1,170 -185 1,033 851 477 -420
Slide 30: Balance Sheet Analysis
Balance Sheet Analysis Net Debt Redemption Schedule (Billion TL) bn TL bn $ In Billion TL In Billion $ TL Hard Currency 20 17.8 6 12.8 5 10.9 15 12.0 12.2 12.5 12.7 11.0 11.3 11.2 4 8.4 9.4 9.3 7.6 10 3 2 5 2.3 2.3 1.9 1.6 1.5 1 1.4 1.3 1.3 0 1.0 0.8 0.9 0 0.6 0.2 0.0 Mar-20 Mar-21 Mar-22 Dec-18 Dec
Slide 31: Profit Before Tax Bridge (Q1 2021 – Q1 2022)
Profit Before Tax Bridge (Q1 2021 – Q1 2022) Despite elevated energy expenses and TL devaluation; strong crack margins, inventory gains and wider differentials were supportive for PBT. Million TL Jun-22 Hizmete Özel / Confidential Investor Hizmete Özel Presentation / Confidential Financials www.tupr
Slide 32: Annual Profit Before Tax Bridge (2020-2021)
Annual Profit Before Tax Bridge (2020-2021) PBT performance was strong in 2021 with better operational performance and lower interest expenses as net FX impact mostly matched with inventory gains Million TL +9,118 Inventory FX -8,530 Jun-22 Hizmete Özel / Confidential Investor Hizmete Özel Presentat
Slide 33: 2022 Expectations
2022 Expectations Med Complex Refining Margin Expectation Withdrawn Tüpraş Net Refining Margin 8 - 9 $/bbl • Elevated cracks to normalize towards the end of Q2 • 26-27 mt production, 28-29 mt sales and 90 - 95% capacity utilization Consolidated Capex ~300 million $ • ~45% of capex for sustainability
Slide 34: Q1 2022 Results
Q1 2022 Results Capacity Utilization (%) Refining Margins ($/bbl) Q1 2022 84.5 85% total capacity utilization in Q1 2022 Tüpraş Net Margin 0 10 20 30 40 50 60 70 80 90 100 Tüpraş FY Target Operationals (mn Ton) Q1 2022 FY Target 6.5 mn tons of sales and 6.0 mn tons of Q1 2022 29 5.2 27 production in
Slide 35: Investments (Million $)
Investments (Million $) Achievements & Ongoing Projects Strategic Transition - Investment Program • c6.9 bn USD investments since privatization • 27% CO2 emission reduction by 2030 (scope1+2), 100% • Reached 9.5 Nelson Complexity reduction by 2050 • Capability to process heavier and more sour crude
Slide 36: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity, interest rate and currency exposure. Proactive in liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Cur
Slide 37: FX Exposure Management (31 March 2022)
FX Exposure Management (31 March 2022) Consolidated Hard Consolidated Hard Currency Assets Currency Liabilities Million $ Payables & Other Cash Liabilities 1,003 4,098 Tüpraş continues to employ strict FX Receivables & Other Assets ST Financial Loans policies to mitigate currency risks 540 323 • RUP
Slide 38: Strategy
Strategy Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 39: Strategic Transition Plan – Investment Areas
Strategic Transition Plan – Investment Areas SUSTAINABLE REFINING ZERO CARBON ELECTRICITY Energy Efficiency and Decarbonization Projects Integrating Zero Carbon Electricity to produce Green H2 • Remain as a Major EBITDA Contributor • Ensure affordable green H2 production, capturing • Improve energy
Slide 40: Strategic Transition Plan – Emission Reduction
Strategic Transition Plan – Emission Reduction EMISSION REDUCTION SCOPE 1 & 2 BASE YEAR SCOPE 1 + 2 7.3 MN TONNES -27% -35% -49% We will invest in energy efficiency & decarbonization Projects, green hydrogen & zero carbon electricity usage in refining to reduce scope 1 & 2 emissions -100% 2017 2030
Slide 41: Strategic Transition Plan - Financials
Strategic Transition Plan - Financials Will eliminate our scope 1 & 2 emissions by 2050 while executing our plan and achieving these results. We are $350mn average CAPEX until 2035, totaling $5 bn. sustainable ROACE will remain above 25% creating ~ $9bn total CF until 2035 and With ample CF, Net Deb
Slide 42: Strategic Transition Plan – Latest Updates
Strategic Transition Plan – Latest Updates SUSTAINABLE REFINING SUSTAINABLE AVIATION FUEL Value Added Products Feedstock & Basic Engineering • Signed basic engineering design • In talks with feedstock suppliers for agreement for alkylation project in İzmir potential collaboration. Refinery. • Identi
Slide 43: Strategic Transition Plan – Latest Updates
Strategic Transition Plan – Latest Updates Transfer of Entek Shares Roadmap of Transaction Entek’s Installed Capacity Expert valuation report completed Conversion rates disclosed at Public Disclosure Platform on 25 April 2022 60 MW 112 17.5 subject to approval by the Capital Markets Board (CMB) MW M
Slide 44: ESG
ESG Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 45: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Sustainability program was kicked off back in 2008 and achieved many milestones Energy Intensity Achievements 102.2 Energy Intensity Targets 96.1 119.1 93.3 103.4 102.22 99.1 98.44 99.1 1.8 0.1 1.1 0.1 93.5 2017 2021 Target Ongoing Other Future Future Other 2030 Tar
Slide 46: Tüpraş's Social & Governance Highlights
Tüpraş’s Social & Governance Highlights Strong Policies have been effectively implemented for years Board of Directors’ Composition Committees under BoD Corporate Governance 12 members Risk Management Audit Corporate Governance Rating 9.58 One-third of the members Executive are independent Ethics He
Slide 47: Appendix
Appendix Hizmete Özel / Confidential Hizmete Özel / Confidential
Slide 48: 2022 Refinery Maintenance Schedule
2022 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Status Crude Oil & Vacuum Q1 15 Done Batman Seasonal Crude Oil & Vacuum Q4 4 Planned Vacuum Q1 6 Periodic Done Lube Complex Q1 7 Maintenance Done İzmir Crude Oil Q4 9 Planned CCR & Isomerization Q4 9 Revamp Pl
Slide 49: Turkish Market Fuel Consumption 2017-2021
Turkish Market Fuel Consumption 2017-2021 Million Tons Diesel Jet Fuel* 28 -2.4% -4.4% +0.5% +10.1% 24.9 8 24.2 23.6 22.5 22.7 +10.5% 5.0 +6.5% 5.3 -54.4% 4.5 14 4 +41.2% 3.4 2.4 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Gasoline LPG -7.4% 4 5 +1.6% 4.1 +0.8% 4.2 +1.2% 4.1 3.9 3.9 3.0 4
Slide 50: Competition - STAR Refinery
Competition - STAR Refinery Timeline Turkish Market Structure (mn tons) Turkish Turkey Tüpraş STAR Total Market Balance Demand Demand* LPG 1.1 0.3 1.4 4.2 -2.8 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 2.4 3.7 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 5.3 1.5 construction kicked off
Slide 51: Competition - Regional Competition
Competition - Regional Competition • Tüpraş competes with 71 refineries in the Mediterranean and Black Sea markets. • Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia flows Mediterranean Black Sea 54 Refineries ~7.8mbd 17 Refineries ~1.8mbd Jun-22
Slide 52: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Refinery Price Tax Refinery Price Tax 40 40 35 35 30 30 16.9 19.5 16.6 15.8 13.4 25 13.7 16.2 25 11.9 13.2 13.8 17.2 11.8 13.3 15.5 20 6.0 20 5.4 15 15 10 10 19.0
Slide 53: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 31.03.2022 31.12.2021 Diff. Diff. (%) Current Assets 78,451 65,429 13,022 20 Cash & C. Equivalents 19,579 20,400 -821 -4 Trade Receivables 19,191 13,517 5,674 42 Derivatives 550 3,818 -3,268 -86 Inventories 34,126 23,756 10,370 44 Pre-paid expenses 420 186 233 125 O
Slide 54: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* Strategic Transition 101% 102% Dividend Plan 79% 87% 89% 77% 80% 66% 64% 15.2 15.2 13.6 14.8 13.3 10.2 Our new business model 5.8 5.8 6.5 7.2 6.2 enables us to pay ~80% average 5.0 3.9 3.9 4.8 3.2 2.5 2.9 3.0 1.6 0.0 2.1 0.0 0.0 0.0 33% dividends and we will rem
Slide 55: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Overall 95.8 Foreign Currency Long Term Tüpraş B+ (Negative) B2 (Negative) Shareholders 95.5 Turkey B+ (Negative) B2 (Negative) B+ (Negative) Koç Holding B2 (Negative) B+(Negative) Transparency 97.2 Analyst Recommend
Slide 56: Tüpraş Production Flow and Yield Breakdown
Tüpraş Production Flow and Yield Breakdown • Tüpraş has 30 million tons of production capacity • Tüpraş operates 4 refineries with an integrated system optimization program Flow Diagram # of Capacity Key Units Units (m3/d) LPG LPG, 3.5% MEROX CRUDE OIL 8 99,420 Gasoline Naphtha, VACUUM DIST. 8 42,75
Slide 57: RUP Feedstock and Production
RUP Feedstock and Production • Residuum Upgrade Plant (RUP) was completed in 2015 and it is the main conversion unit of Tüpraş. • First periodic maintenance was completed in Q2 2019. Total Processing ~4.50 mn tons Total Output ~4.25mn tons Jun-22 Hizmete Özel / Confidential Investor Hizmete Özel Pre
Slide 58: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphtha 5yr range 2022 2021 5 yr ave 5yr range 2022 2021 5 yr ave 5 5 -0.3 0 0.9 -2.1 -1.00.3 0.2 0.1 -5 -8.1 -3.2 -1.0 -10.0 -2.7 -4.2 -11.4 -3.6 -13.7 -15.8 -5 -4.5 -15.7 -4.1 -15 -17.2 -17.7 -19.6 -21.4 -7.2 -23.2 -10 -25 -27.7 -10.5 -24.0 -29.2 -29.5 -35 -15 -18.
Slide 59: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group • The only Turkish company in Fortune Global 5002. ~8 ~7% ~21% Koç Group’s Pioneer in its Sectors Combined Total Exports / Market Cap/ Revenues / Turkey’s Borsa Istanbul GDP1 Expor
Slide 60: Investor Presentation Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential Hizmete Özel / Confidential